The five legal cases that defined the year in music

Fri Dec 18, 2009 6:41pm EST
 
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By Ben Sheffner

NEW YORK (Billboard) - Almost a decade after the major labels launched their legal assault on Napster, courts are still writing the rules of the road for the music business's digital future.

Companies can't set out to build a business based on their users' infringement of copyright, courts had already ruled. But the precise meaning of that dictate remains in doubt. What steps must sites take to combat infringement? What are the proper penalties for those who infringe? This year, courts inched toward resolution of these questions, giving labels, publishers and artists a bit more certainty as they decide whom to work with and whom to sue.

Below are 2009's top five cases that will shape the future of the music business.

UMG RECORDINGS V. VEOH NETWORKS

In September, a federal judge in Los Angeles ruled decisively against Universal Music Group in the label's copyright suit against video-sharing site Veoh.com. UMG had argued to the court that Veoh was liable for copyright infringement by encouraging users to upload videos, which Veoh translated into the proper format, organized and categorized, then ultimately streamed to millions of Web surfers -- all without paying copyright owners. But the court held that Veoh qualified for a "safe harbor" under the 1998 Digital Millennium Copyright Act, because the site followed a policy of promptly taking down videos upon notification from UMG and kicking "repeat infringers" off the site.

In the pre-Internet world, the burden was always on the distributor to obtain proper licenses before exploiting a copyrighted work. But the ruling in the Veoh suit dealt a significant blow to copyright owners' efforts to maintain total control. Under the court's interpretation of the DMCA, a Web-based company can enlist its users to upload unlicensed works, and it's up to the copyright owner to issue takedown notices -- sometimes multiple times. If upheld on appeal, the decision represents a major shift in power from copyright owners toward online companies that rely on user-generated content.

CAPITOL RECORDS V. THOMAS-RASSET; SONY BMG MUSIC ENTERTAINMENT V. TENENBAUM

Of the more than 17,000 individuals the major labels targeted for downloading and "sharing" songs through peer-to-peer networks, only Jammie Thomas-Rasset and Joel Tenenbaum fought all the way to trial. They both lost badly. A Minneapolis jury socked Thomas-Rasset with a whopping $1.9 million verdict for infringing 24 songs, and a Boston jury ordered Tenenbaum to pay $675,000 after he admitted to infringing 30 works.   Continued...